Global Sport Leadership Practice

The Global Sport Ecosystem

Joe Bailey spent the first 25 years of his professional career associated with the
sport of American football (Dallas Cowboys and the NFL). When he joined one
of the world’s leading executive search and assessment firms, Russell Reynolds
Associates, in 1995, it was natural to begin by focusing on assignments in
functional areas in football (NFL and the CFL). He then broadened his client
base to include basketball (NBA), horseracing (Hong Kong Jockey Club), Olympic
sports (Salt Lake) and other competitions. Subsequently, he did work with
various media companies in the print sectors (The Sporting News), television
and radio (Vulcan Media), facilities (Reunion Arena/American Airlines Center),
and internet (Rivals.com). He expanded the practice to include companies that
provided goods and services such as accounting (PricewaterhouseCoopers) and
equipment (Wilson Sporting Goods).

The Global Sport Ecosystem (GSE) was first conceived in 1996 by Bailey as
a straightforward way to both explain and compare and contrast the “sports”
practice from the “media” practice and “entertainment “practice. The GSE has
been refined over some 20 years but its basic elements remain the same.

DECEMBER 2014 1
RESEARCH STUDY

From 1995 until 2005, Bailey conducted more than 250 assignments,
predominately within the GSE while continuing his operational experience by
simultaneously managing several offices for the firm, including the New York
flagship operation.

During the early stages of his service consulting career, he became aware of the
underlying differences among “sports,” “media, “and “entertainment” in both
their business models and in the leadership and management talent required
to execute the business. In order to correctly execute a search assignment, a
thorough understanding of the business model is required, followed by a clear
understanding of the role and responsibility of the position.

His career in sport got off to a great start in 1970 in the area of human
performance evaluation. His first position was as a player scout for the Dallas
The single most important Cowboys Football Club, reading, grading, and writing thousands of reports on
skill for any leadership college players. Missing the evaluation of a player was a fire-able offense.
consultant is the ability And, of course, each player was a “position” player, so not only were all scouts
to evaluate clients and judging players based on quantitative and qualitative measurements, the
candidates. This skill can department was also comparing and contrasting players against one another.
only be acquired by practice,
practice, practice—using
tools that are learned
EXECUTIVE TIP
coupled with countless
hours of interviewing and The prospective chief executive officer may be strong in many areas
writing. Evaluating a person and may be a good chemistry fit – it all boils down to competency and
incorrectly can be fatal to chemistry – but if prospective candidates cannot compete against
the very best, everyone loses. Bailey quickly learned that people are
your professional career.
the only form of a sustainable, competitive advantage. It is literally
impossible to compete over an extended period of time without the
best talent in critical positions.

2 GLOBAL SPORT LEADERSHIP PRACTICE

 EXECUTIVE TIP

Leaders also learn that they really only have ”full control” over two
areas of their business – talent and culture. Coaches know this also,
at least all the ones considered world class coaches and managers.

Evaluating Talent is the Differentiator

Emotional
Mental Intelligence
Toughness
Constraint
Attribute Results Satisfaction
Technical
Intuition

Attitude

Strategic skills intellect Moral

Intelligence
Relating

Behavioral Motivation
Operating
IQ Medical Cultural Fit
Drive
DNA
Interpersonal Energy

Personal Ecosystem
talent competency Personal
& chemistry personal

Compensation
Additional Sensitivity
Special to Risk
Potential Relationships
Broad-gauged Reputation Habits
Personal Point of View
Experience Bias
Education
frame
the Deep knowledge General
world
Knowledge

Experience
Languages
International
Experience
Broad
Application

Relevant
Knowledge

DECEMBER 2014 3
RESEARCH STUDY

Bailey also began to analyze the characteristics of talent that populated the GSE,
Content which he divided into three distinct business-to-business sectors: Content,
Providers
Channels of Distribution, and Service Providers. For example, the “content”
businesses, their culture and the people seemed similar to the industrial
sector. There was a process mentality, a systems-based orientation, a belief
in executing fundamental tasks through continual execution, and union
relationships. Leaders tended to be resistant to change, risk-adverse, not
overly innovative, single-vision focused, hierarchical, turned inward into their
work and functioned in silos. They were mission-driven with a heavy reliance
Distribution
Channels on teamwork.

The “channel of distribution” talent and culture fell into two camps. The media
side was populated by bright risk-takers, mercurial personalities who were
self-assured to the point of arrogance, creative, entrepreneurial, but poor on
structure, process, and strategy. The second camp focused almost solely on
operations and margins with little regard for the end-user consumer.

The third business sector, “solution providers,” was appropriately titled. This
Goods & housed leaders who enjoyed multiple, complex challenges and opportunities.
Services
Providers They had a sales DNA, were optimistic, gregarious, personable, and relationship
driven. They respected structure but were very proactive, entrepreneurial, and
had specialized knowledge about their own areas.

Granted, these were general impressions, but as the evaluation experience

continued, the differences in the sectors held. The exceptions occurred at the
C-suite.

EXECUTIVE TIP

Bailey suggests that everyone who considers entering the industry

of sport to make sure they really know themselves and how they are
“hard-wired.” How? Get outside help through diagnostic testing.
One recommendation to everyone is the JOC – Johnson O’Connor
Foundation. Why? Knowing yourself, particularly your strengths,
gives you direction as to what sector is best suited for you for a career
in the industry of sport.

4 GLOBAL SPORT LEADERSHIP PRACTICE

It was also a noticeable trend that the general media, players, agents, etc. spoke
of sports as entertainment. This stemmed from the early 1980’s when one
major U.S. sport, the NBA, was in such bad shape, that it had to resort to off-
court activities to enhance its appeal. Calling sports “entertainment” denigrates
sport. Sport is entertaining to be sure, but is more than that, and more than just
a business.

The Business-to-Business Sport Ecosystem

Businesses Business or divisions

which distribute which are solution
sport content: providers to content
• Television Distribution Content providers and
Channels Providers distribution channels:
• Satellite
• Leagues
• Cable
• Teams
• Radio
Diversified Sport,
Entertainment, • Associations
• Internet PE-Backed Companies • Federations
• Wireless
• Social Media
• Print Goods &
Services Providers
• Facilities

Business or divisions • Retail • Construction • Telecom

which are solution
• Sporting Goods • Professional Services • Video Gaming
providers to content
providers and • Manufacturers • Sports Agencies • Corporate Sponsors
distribution channels:
• Food & Beverage • Technology • Financial Services
• Healthcare

DECEMBER 2014 5
RESEARCH STUDY

This determination begs the question as to what are the fundamental

differences between sport and entertainment. The easiest way to differentiate
one from another is to say that sport is authentic and entertainment is
contrived or orchestrated. Media serves as a platform to deliver both sport
and entertainment. While both sport and entertainment are event-based,
the reason authenticity applies to sport is that the outcome is unknown.
Authenticity is the reason why the NFL is the most financially successful —
$10 billion with aspirations to $25 billion in revenues. The enterprise is based
on the phrase, “On Any Given Sunday.” Every team has an opportunity to win.
Nothing is orchestrated. Money does not buy success on the field.

Event-Based Industry and Sectors

The “event” is the interdisciplinary epicenter of the Global Sport Ecosystem.
It is the place where virtually every discipline in the system comes together
and the definitions of the three distinct business sectors meet. The first
business sector is any entity whose “primary” business is to create and own
content. Generally these are leagues, teams, associations, federations, and big
event owners such as the IOC, which sanctions Olympic Committees so they
can compete.

EXECUTIVE TIP

The IOC is the world’s most powerful and prestigious enterprise in

the ecosystem. Combine the revenues of the IOC and every Olympic
Committee and it is a colossus.

The second business sector is comprised of any entity whose primary business
is to distribute content on various platforms and channels. Some content
providers are also involved in distribution, which explains why these two
sectors overlap. Generally speaking, over-the-air/free TV, cable, internet,
satellite, radio, print and facilities of all kinds – arenas, big box stadiums, tracks,
sports complexes — all primarily exist to distribute content.

To illustrate the basic business-to-business relationship between content

providers and channels of distribution, consider a real experience as an
example. Joe Bailey served as the CEO of Dolphins Enterprises, for which

6 GLOBAL SPORT LEADERSHIP PRACTICE

he was responsible for the Miami Dolphins Football Club (content-NFL) and
Dolphin Stadium, a 75,000-seat, multi-use, big box stadium (channel of
distribution). Serving as the CEO of both the team and the stadium, as well as
Dolphins Enterprises real estate holdings, foundations, and anything else the
principal owner become involved in, he managed the enterprise to maximize
assets by leveraging the individual sectors.

The Dolphins Football Club and stadium had a business-to-business

relationship. There were contractual agreements in place. However, for
any facility to maximize venues it had to use its capacity in multiple ways.
Therefore, the stadium had business-to-business relationships with the
Florida Marlins (MLB), the University of Miami (football), the Florida High
School Athletic Association, the Super Bowl, the Orange Bowl, various
soccer promoters, concert promoters, special event promoters, outdoor
markets, Hollywood premieres, etc. The stadium had a business-to-business
relationship with a multitude of entities in addition to the football club. And
that is what most “channels of distribution” companies have as well – multiple Whether it is called insight,
business relationships with content providers. judgment, wisdom or a sixth
sense, this combination of
The third and most diverse business sector is defined as any entity which
skills, knowledge, talent
provides goods and services to “content providers” and/or “channels of
and motivation plus a set
distribution” within the ecosystem. This includes a stand-alone business
of biases help leaders and
or a division of a larger company. This is a massive sector which provides
coaches see things that other
a multitude of component services to the ecosystem. While the enterprises
people just don’t see and then
within this sector are diverse in size, scope, and offerings, they may be
incorporate factors which
categorized in the following way: any company that spends money to
strict, logical processes
advertise, sponsor, or sell products and services to the GES. Examples are
cannot handle.
technology solutions providers, food and beverage operators, security and
medical providers, sporting goods and sports equipment manufacturers,
retailers, licensees, special service providers such as parking, policing, security,
accounting, legal, executive and leadership consulting; construction and
architectural firms, special advisory firms for marketing and branding, public
relations, gaming, ticketing, and financial institutions. All of these businesses
have specialists or special groups working every day in the industry of sport.

DECEMBER 2014 7
RESEARCH STUDY

Overlap and Trends

The Global Sport Ecosystem’s sectors overlap because many enterprises operate
in two sectors and sometimes all three. The trend is that the center of the
system is expanding. Many private equity and venture capital firms are in the
center and broad-gauged companies such as AEG, IMG, and even leagues and
teams are entering this area. Alliances, joint ventures, partnerships, mergers
and acquisitions will flourish as center activities increase. This is where the
“business of sport” truly exists and is home to people most closely associated
with the financial sector. Does this lead to the skills, knowledge, talent and
motivation of the new effective leader? You bet it does.

Philanthropic Complete Sport Ecosystem

Foundations
Corporations Governments
Consumers
Leagues/Teams Deep involvement
Players/Coaches outside the U.S.
Governments

Distribution Content
Channels Providers

Diversified Sport,
Entertainment,
PE-Backed Companies

Goods &
Services Providers

Viewers Participants
Watchers Male/Female
Readers Youth/Senior
Listeners Attendees Individual/Team
People attending events Amateur/Professional

8 GLOBAL SPORT LEADERSHIP PRACTICE

 EXECUTIVE TIP

“Sport is a laboratory for leadership and a metaphor for the belief

that in any endeavor, people are the only form of a sustainable,
competitive advantage. Sport is real, serious and consequential.
To get to and stay at the top, the most effective leaders of the future
require a broader perspective, a sense of purpose, adaptability and….
wisdom.”
Joe Bailey, Managing Director, RSR Partners Global Sport Leadership Practice

Oxygen Required
The ecosystem does not function without the “citizens” of the ecosystem…the
consumer. To illustrate their importance, a distinct sector surrounds the three
overlapping sectors and provides the energy that allows the ecosystem to
breathe. This visually demonstrates how vital the consumer is to the system.
They are the sun in the ecosystem. It is, intellectually, a “no brainer” to see
the business-to-consumer and business-to-government connection, but our
visual emphasizes their importance, size, and diversity. We estimate that 77%
of the population of the United States contributes to the GSE in the U.S.

Through research, it seems that the clearest way to define the consumer is
to divide the category into five groups. Again, portions overlap and common If the purpose of marketing
sense dictates where and when it occurs. The first is the Participant Group. is to increase brand loyalty
This represents people who actually participate in a sport. The definition through retention and
is male/female, youth to senior, casual to rigorous exercise for wellness acquisition of new followers,
to competitive amateurs and professionals, individual sport to team sport, then the importance of
amateur to professional, Olympic to Paralympic. What is common to all? Sweat branding takes center stage
equity! It is why a famous sports writer named the business the “perspiring in order to protect attendance.
arts”.

Participants
The Participant Group is a key indicator of the health of a sport. For example,
despite its present popularity, participation in American football in the U.S. is
declining while a number of other sports are on the rise. What does this say
about its future and who is guarding the game?

DECEMBER 2014 9
RESEARCH STUDY

Attendees
The second consumer category is Attendees. To those that operate any content
provider, this should be the single most valuable group. If attendance is
declining, the sport, the teams, the leagues are in trouble. What does decreasing
attendance say about the value of the event and the sport? A studio-based
sport is one step from becoming an irrelevant sport. Could it be a result of
pricing, market conditions, or the customer experience?
Since sport delivers the most
If one of several factors required to create customer or fan happiness is missing, predictable audience in terms
attendance declines. Since attendees make the greatest personal commitment of numbers and demographics,
in time and money to your business, the care for this group cannot be media channels are paying
overemphasized. And with so many consumer alternatives, many of which are escalating ”rights fees” to
free or available “on demand,” customer expectations continue to rise. acquire this Observer Group.

EXECUTIVE TIP

If the purpose of marketing is to increase brand loyalty through

retention and acquisition of new followers, then the importance of
branding takes center stage in order to protect attendance.

Casuals
The next category is the Observer Group. It consists of viewers, watchers,
readers of sport, i.e., followers; passive but interested. This category is
served by the general sports media. Since sport delivers the most predictable
audience in terms of numbers and demographics, media channels are paying
escalating “rights fees” to acquire this Observer Group. Collegiate sports, in
an effort to capitalize on these rights fees, have created seismic shifts in their
own ecosystem. The decisions by leaders in the collegiate sport category have
been interesting. “Economics” in college athletics, just as in the global economy,
is playing an increasing role in major decisions such as alignment, revenue
versus non-revenue sports, etc. The media is changing the amateur scene in
increasingly negative ways.

10 GLOBAL SPORT LEADERSHIP PRACTICE

Trends
As mentioned, one certain trend in sport will be new alliances, joint ventures,
partnerships, spin-outs, etc. that today would seem unimaginable. Whole
sports which have similar characteristics will merge. Sports will attempt to
create and control their own ecosystem. It is already being done in the U.S. and
it will spread globally but in a “different way”.

Impact of Government
This “different way” brings us to the Government Group, and the business
to government relationship. In the U.S., the lack of direct government
involvement in the industry is an anomaly to the rest of the world. Even the
United States Olympic Committee’s charter has no government funding, but
plenty of oversight policies to be followed. While no national government
entity exists to oversee the industry, many U.S. cities recognize the economic
and psychological importance of the industry and have formed sports
commissions. Since the industry is “event-oriented,” enticing “events” has a
positive economic impact. In many countries, there is a senior-level cabinet
minister or government office responsible for the oversight of the sport
category. This office oversees and coordinates activities in sport that the
government supports financially and strategically.

The dilemma is that for the large-scale, world events such as the Olympics,
Paralympics, the Youth Games, the World Cup, World Championships, etc.,
the U.S. misses winning the competition to host them because it has no
coordinating body similar to other countries. Eventually, the U.S. government
will form a public, private partnership to enable the country to compete more
effectively for large scale events with massive economic benefits. This will
require enlightened leadership. In the meantime, governments around the
world are pouring money into the industry.

DECEMBER 2014 11
RESEARCH STUDY

EXECUTIVE TIP

” Today (sports) is at the heart of global development and education

programmes, it helps provide a focus for disaffected youth, it is the
catalyst for regenerations and construction projects and is at the
heart of just about every health programme world-wide.”

Kevin Roberts, Editorial Director, Sports Business International

As Governments Go While philanthropy does not

make headlines except in
Interestingly, governments are thinking of sport in a whole new way. They are certain instances such as
incorporating sport into their country’s economic strategy and plan. Countries Armstrong’s Live Strong, or,
such as Saudi Arabia, China, Singapore, Qatar, Australia, and Canada are say, the Special Olympics, it is
examples. Russia is the most recent and obvious with Sochi and the World Cup. a manifestation of the power
of sport to influence and is a
Philanthropy and Social Change keystone to a healthy sport
and industry.
The final consumer bucket is often overlooked but is highly important. The
category is broadly defined as philanthropy. Begin with the premise that if an
enterprise or person is doing “well,” it should also be doing “good.” Hence, the
industry of sport — $440 billion in the U.S., more than $400 billion Pan-Europe
and global growth ­— is doing well. The industry has now been recognized by
the United Nations as being real, serious, and consequential far beyond a simple
event-based industry.

EXECUTIVE TIP

” Sports is a global language capable of bridging social, cultural and

religious divides. It can be a powerful tool for fostering understanding,
tolerance and peace…it teaches us teamwork and fair-play. It builds
self-esteem and opens up new opportunities. This in turn can
contribute to the well-being of whole communities and countries.”

Kofi Annan, Former Secretary General, United Nations

12 GLOBAL SPORT LEADERSHIP PRACTICE

The United Nations’ various programs – UNICEF, WHO, UNESCO, etc. – all
leverage sport for global engagement. The IOC has been given special observer
status to the U.N. Teams, leagues, associations, federations, owners, stadiums,
coaches, players, managers, etc. have foundations as do corporations and
people of means involved in sport. Study Beyond Sport which promotes,
develops and supports the use of sport to create positive social change
by recognizing thousands of NGOs around the world. There are strategy
specialists in sports philanthropy. While philanthropy does not make
headlines except in certain instances such as Lance Armstrong’s Livestrong,
or, say, the Special Olympics, it is a manifestation of the power of sport to
influence and is a key to a healthy sport and to the industry as a whole.

DECEMBER 2014 13
RESEARCH STUDY

Threats
In any ecosystem, there are substantial threats that must be acknowledged
and combated. Whether global, national, or local in nature, since we have
a “global” ecosystem, the following areas are considered “real, serious, and
consequential” threats:

Doping Continues to threaten the very integrity of sport

Corruption, Cheating, Driven by betting, it is second only to doping

Match Fixing

Violence Can make sport a game of survival

Governance Issues of poor governance cause a lack of trust

and confidence at both amateur and professional
levels
Leaders will tell you that they
Environmental Concerns serve to undermine community value really only have ”full control” over
of sport, i.e., air, noise and light pollution, waste
two areas of their business—
management, toxic chemicals, land use, etc.
talent and culture. Coaches know
Security and Safety Measures to protect both participants and this also, at least all those who
attendees are world-class coaches and
managers.
Bad Behavior Created by rivalries, a ”win at all costs” mind set,
political and religious issues, alcohol, etc.

Participant Injury Improper rules and equipment to protect athletes

Sporting Goods Quality control, child labor issues, intellectual

property rights, availability, innovation costs

Agent Representation A ”fifth column,” middleman group with

destabilizing influences within the industry

14 GLOBAL SPORT LEADERSHIP PRACTICE

 ABOUT THE AUTHOR
Opportunities
The following are not mutually exclusive:

1. Focus on new technology, new business models, new products, etc.

which will help combat the global issues facing the ecosystem.

2. Find undervalued companies with hi-growth potential which can

do the same.
Joe Bailey leads the firm’s
Global Sports Leadership
3. Create a “Center for the Future of Sport” which will serve as an
Practice. Joe recently served
investment facility and/or an open-platform think tank similar to the
as the interim Commissioner
MIT Media Lab and Cambridge Enterprises. of the Big East, and has
extensive experience in the
Leadership global sports industry as a
leader, advisor and recruiter.
Solving complex problems with burning platforms requires effective leadership. He was the CEO of the NFL
Miami Dolphins franchise,
Once the ecosystem becomes more formalized, there is a need for a coalition of
Deputy Commissioner of the
entities representing content, distribution, solution providers and consumers National Thoroughbred Racing
broadly defined. Out of this coalition will come ethical leaders, effective Association, COO of the
managers and responsible citizens of the ecosystem to formulate solutions in a World League/NFL, and VP of
Administration of the Dallas
strategic way.
Cowboys Football Club.
One good example of this is The International Center for Sport Security. The Most recently, Joe was
ICSS is attempting to set a “standards index” for countries to test large-scale founder and CEO of Global
sporting events. Events are places where all members of the ecosystem come Sport 360—a consulting
practice where he advised
together. If this “index” is effective, it will be similar to WADA in terms of
businesses in the global
setting standards for drug testing.
sports industry on strategies
and tactics to maximize
A new “Global Institute of Sport” will serve to increase avidity to sport, increase
innovation and talent.
profitability and philanthropy, and monitor all aspects of existing and new
threats. Joe graduated from the
University of North Carolina
at Chapel Hill, having
Conclusion also completed Harvard
Business School’s Advanced
The story of the Global Sport Ecosystem reflects globalization of economies Management Program. He
with all its opportunities and challenges. It requires leadership which and his wife Charlotte divide
recognizes sport as “more than a business.” It fits into the age we live in today - their time between New York,
NY and Scottsdale, AZ.
the Age of Humans. The Age of Humans will be transforming the planet. Sport
will play a major role in that and will provide everyone with a more sustainable
future. DECEMBER 2014 15
Global Sport Leadership Practice

ABOUT THE GLOBAL SPORT PRACTICE AT RSR PARTNERS

The Global Sport Leadership Practice of RSR Partners helps solve complex
talent issues for organizations involved in the sports ecosystem. Our
team of domain experts serves content providers; distribution channels,
including media and facilities; and solution providers from healthcare
providers and sporting goods manufacturers to construction and food and
beverage suppliers. Our capabilities include executive leadership searches
for commissioners, owners, chairmen, board members, head coaches,
managers, and senior management. We also provide assessment, team
effectiveness consulting and succession planning services.

CONTACT US

Joe Bailey Greg Lau Betsy Barrett

Managing Director Managing Director Principal
(203) 618-7050 (203) 618-7030 (203) 618-7056
jbailey@rsrpartners.com glau@rsrpartners.com bbarrett@rsrpartners.com

Nona Footz Graham Michener Cameron Smith

Managing Director Managing Director Senior Associate
(203) 618-7070 (212) 661-5727 (301) 675-8855
nfootz@rsrpartners.com gmichener@rsrpartners.com csmith@rsrpartners.com

280 Park Avenue, 30th Floor–West Building, New York, NY 10017 I Phone: (212)-661-5725 www.rsrpartners.com